FEDA seeks to close Africa’s US$110bn equity financing gap …opens office in Rwanda
Afreximbank’s impact investment subsidiary, Fund for Export Development in Africa (FEDA), unveiled its office in Kigali, Rwanda, on Wednesday as it seeks to tackle Africa’s US$110 billion financing gap for intra-African trade.
Fifteen African countries, including Zimbabwe, acceded to agreement establishing FEDA to provide equity, quasi-equity, and debt capital to finance the multi-billion-dollar funding gap (particularly in equity) needed to transform the trade sector in Africa.
Only Rwanda has ratified FEDA’s establishment agreement.
Afreximbank president Benedict Oramah said FEDA “adds to the pool of institutions helping Africa to create its own capital base for development”.
“With a focus on providing long-term, patient capital targeting all segments, from SMEs to corporates, and cutting across dynamic sectors of value-addition, services, and technology, FEDA is poised to drive Africa’s development under a new vision of de-commoditised, growth-oriented pathways underpinned by a dynamic private sector,” Oramah said.
Funds under management under different strategies amount to about US$800 million and FEDA is using some of these funds to create and mobilise additional funds, Oramah said.
“FEDA is also a co-promoter of a US$500 million Africa Credit Opportunity Fund and is currently creating a US$100 million Venture Capital Fund to focus on start-ups and SMEs with seed funding from Afreximbank,” he said.
Rwanda’s Prime Minister Edouard Ngirente said the establishment of FEDA in Rwanda reflected “our commitment to not only fostering economic development within our borders but also to playing a pivotal role in the economic transformation of our continent”.
“This initiative is a step closer to the realisation of the goals outlined in the Agenda 2063 of the African Union which lays great emphasis on the transformation of African economies and acceleration of economic growth on the continent,” Ngirente said.
He noted that despite Africa’s significant resource endowments and contiguous markets, the continent had the lowest level of intra-regional trade in the world, adding that the continent’s share of value created remained the lowest across many products and commodities due to sub-optimal value addition.
FEDA began operations four years ago. It became the fund manager of the US$1 billion AfCFTA Adjustment Fund in 2023.
FEDA pursues a multi-sector investment strategy along the intra-African trade, value-added export development, and manufacturing value chain which includes financial services, technology, consumer and retail goods, manufacturing, transport and logistics, agribusiness, as well as ancillary trade enabling infrastructure such as industrial parks.-newsday
